Glossary · Operations
Trade Reconciliation
Trade reconciliation matches each trade in a fund’s order management system or books against the broker’s confirmation and the custodian’s or prime broker’s records, field by field, around trade date. It catches wrong quantities, prices, dates or accounts before settlement, while errors are still cheap to fix.
Every executed trade is compared with the counterparty’s view of it: security, side, quantity, price, gross and net amounts, commission and fees, trade date, settlement date and account. Matched trades proceed to settlement; mismatches become trade breaks that are resolved with the broker the same day where possible.
Trade reconciliation is the earliest of the three core reconciliations. It looks at individual transactions, whereas position reconciliation checks the resulting holdings and cash reconciliation checks the money. A trade that is reconciled on trade date rarely causes a position or cash break later. Errors that are missed tend to surface as settlement fails.
Cash vs position vs trade reconciliation: how do they differ?
| Reconciliation | What is compared | Typical timing |
|---|---|---|
| Trade reconciliation | Each trade’s terms against the broker confirmation | Trade date, before settlement |
| Position reconciliation | Quantities held per security and account against custodian and prime broker | Daily, after settlement and corporate actions |
| Cash reconciliation | Cash balances and transactions against bank, broker and custodian statements | Daily for trading funds; at least monthly for private funds |
How is a trade reconciled?
- Load executions from the OMS and confirmations from brokers or a matching platform.
- Match on agreed keys: security, side, quantity, price and trade date.
- Compare amounts, fees and settlement details within agreed tolerances.
- Raise each mismatch as a break with an owner and contact the broker.
- Amend the booking or the confirmation, and re-match before settlement.
Related terms
Where this comes up in our work
Reconciliation
Fund reconciliation is the daily comparison of a fund’s own records with its banks, brokers, custodians and administrator, so that cash, positions…
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